Breaking the Paycheck to Paycheck Cycle

In the last reflection, we were looking at the idea of savings, and how one of the goals that can be achieved using the tool of savings is breaking the paycheck to paycheck cycle.*

Of course, there’s a lot more to achieving that goal, but one of the very early, very essential steps is to be realistic and focused on the specific goal you want to achieve. Part of that comes from awareness, looking back at the last few months of income and expenses: knowing if you tend to spend more than you bring in (in income, not loans or credit cards), knowing by how much, and knowing where the money is going.

There’s this piece of advice that sometimes seems really tired or futile or useless, and that is to invest whatever you can, even just $10 per month, in the future, whether by stocks, savings, whatever, depending on who’s giving the advice. It can seem pointless when you’re living close to the edge or don’t know if the next check will cover the next round of expenses. So, I’d say, there’s that other, more general advice of, “Take what’s useful and leave what’s not,” and apply that in this case, too.

What is useful is the idea of investing in your future self, and what is not yet relevant or useful right at this very moment is thinking super long-term when you’ve got to get the short term in order. So leave that, and take the advice of investing in your future self whatever little bit you can whenever you can.

ALERT:Number nerdery detected ahead!

Let’s just say it’s $5 one week, $12 the next, then the next week you have to overspend by $10, and you are able to save $3 in week 4.

Well, hey, take that success. Because in weeks one and two you invested in your future self (which happened to be week three), by the end of the month, you’ve still set aside $10 for your future self.

$10 doesn’t seem like much, but remember how in week three you had to spend $10 more than you intended to? If you hadn’t been investing in your future self, that same $10 would feel a lot more stressful and scary. And let’s say you hadn’t been saving some money for your future self, and that $10 had to come from somewhere and you say, “I’ll have enough by week five, I’ll pay X then.” Well, then, even though you did have the $10 in savings that you used to cover it, when week 5 comes around and you have your money for the week, take that $10 out right away and invest it in your future self (which, sure, might be the end of the week, but hey, maybe week 5 can be $15 saved instead of $5. That’d be pretty cool, because if everything else in weeks 5-8 matches weeks 1-4, you’ll have saved $20 in that second month, for a total of $30.)

But then, let’s say you have an unexpected expense, for $35. Now you’re taking $5 from the following week, you might feel defeated. You might say to yourself, “Here I’ve been working so hard for two months, I’m still using more than I’ve saved, what’s the point? I’ll never break out of this cycle.”

And I would humbly beg you, if you must feel something, feel proud of yourself.

Because of your hard work saving $30, you don’t have to worry about most of that expense, just $5. Because of getting in the habit of saving a little bit here and there, you’re more likely to see how you can get that $5, or you’re more confident that if you have to borrow $5 from a friend or coworker, you could pay them back the next week.

That’s not a minor accomplishment; many people don’t get to that point, so really, honestly, seriously, all-the-relevant-adverbs, please do take a moment to savor your success.

Then once you’ve done that, renew your resolve to continue saving so that you can keep on racking up those accomplishments, all on your way to having enough saved to cover all of whatever unexpected expense may come up. You can do it!

*As I have before, I want to point out that individualized advice can be far more useful than a blog that addresses the topic. Please send me a comment using the “Contact” form at www.bebudgetexplorers.com for more information, or to suggest a reflection topic.